Environmental, social and regulatory response to them are happening faster than ever and poses sizeable challenges for businesses. However, many businesses remain focused on hard financial cost/benefit analysis while ignoring intangible costs like their carbon footprint or waste emissions. This is becoming untenable and all stakeholders – customers, government and regulators, and the society at large – are pushing for more sustainability in business decision making.
How can investors factor in and benefit from these trends?
For investment managers navigating this backdrop to deliver value is a challenge. The answer is sustainable investing – focus on identifying sustainably managed businesses while understanding the risks and opportunities of environmental and social change.
We expect the companies that adapt or align themselves to these changes to benefit disproportionately going forward, while those which fail to act on these issues are likely to fall behind and open themselves up to regulatory sanctions or getting shunned by the society and consumers.
The ESG framework provides investment managers with a tool to capture these issues in a comprehensive manner. ESG stands for Environmental, Social and Governance factors and the framework is used by investment managers to identify how each company in their coverage is exposed to or are reacting to these factors.
Interest in ESG analysis has been growing rapidly around the world. This surge in interest has been accompanied by the awareness that looking at sustainability does not have to come at the cost of investment performance. ESG analysis allows investors to assess longer term and harder to measure issues that can have a major impact on stock performance and thus can become an important source of bringing down portfolio risk.
Axis ESG Equity Fund
Axis AMC has been at the forefront of product innovation and creating a robust investment process that has the potential to deliver long term performance for its investors. Axis ESG Equity Fund takes us forward on both these parameters with an innovative new product that aims to invest in companies that we believe can generate sustainable business performance over the long term. The Axis ESG equity fund will thus offer investors with a solution that allows them to make money responsibly.
The ESG approach followed by Axis AMC will have the following key characteristics
– A forward-looking and dynamic view of ESG for each company
– An ESG process that captures global best practices (with inputs from Schroders)
– A standardised framework that uses data along with analyst assessments
– ESG to be adopted into the overall AMC investment process
Chandresh Kumar Nigam, MD & CEO, Axis AMC said, “We at Axis AMC believe that ESG is a logical extension to our philosophy given our core focus towards quality and sustainable growth. By combining ESG analysis with traditional financial metrics we can come up with a more holistic understanding of each company in our portfolio. We have faith that the Axis ESG Equity Fund by investing in a portfolio of such companies will have strong potential to offer its investors a rich source of alpha.”
The new fund offers (NFO) opens for subscription on January 22, 2020 to February 05, 2020. Jinesh Gopani, Head Equity, and Hitesh Das, Fund Manager – Foreign Securities, at Axis Asset Management Company will be managing this fund.